Venture Firm Brand Building: A Disconnect Between Entrepreneurs And Partners

Venture partners try harder than ever these days to build brand and influence deal flow, but their efforts may not be on target, according to a new survey

The survey offers clear evidence that brand, particularly the brand of a firm’s partners, attracts entrepreneurs and increases deal flow. Almost nine in 10 of the 158 startup CEOs interviewed said so, according to the work released Tuesday by the National Venture Capital Association, DeSantis Breindel and Rooney & Associates.

But what entrepreneurs define as “brand” and what VCs believe to be brand differs significantly. For entrepreneurs the top two brand building traits are “entrepreneur friendly” and “trustworthy.” What follows somewhat distantly are a firm’s ability to be “collaborative,” “supportive” and “experienced.”

“Hands-on” and “expert” are down at the bottom, or near the bottom, of the list.

Venture capitalists see brand differently. They emphasize their experience over their friendliness to entrepreneurs and often stress a hands-on approach over trustworthiness, the survey found.

What’s more, they underestimate the importance of gender diversity. One in four CEOs said the gender make-up of a firm’s partners matters. Only one in 10 of the 216 VCs interviewed for the survey concur.

The brand survey is the first by the NVCA and for that reason offers useful tips to VCs. For instance, while almost three-quarters of entrepreneurs (74%) say the reputation of a firm’s partners is the top criteria when choosing a venture firm, the ability to provide value beyond money ranks a close second at 72%. The two represent the top selection criteria by far.

As to value-added services, number one on the list are firm-sponsored summits where CEOs, CFOs and CIOs from portfolio companies can learn from each other. Few entrepreneurs found office hours with partners to be of great value.

Also of note is the way entrepreneurs perceive brand. Two thirds said a word-of-mouth recommendation from an entrepreneur were most influential, the survey found. Third-party recommendations ranked second best.

Venture capitalists also recognized the importance of a recommendation from an entrepreneur. But many more believed recommendations from another VC or LP was more valuable than the entrepreneurs found them.

Another difference between partner and founder is proximity. More venture capitalists than entrepreneurs said their firm’s location near a portfolio company was an advantage.

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